House Bill No. 149

Introduced By r. johnson

By Request of the Department of Commerce

A Bill for an Act entitled: "An Act revising provisions related to the health facility authority; revising definitions to include additional variations of health institutions; clarifying authority to make direct loans from the authority's funds; clarifying funding of the capital reserve account; providing that the authority may make certain deposits into the capital reserve account; clarifying that the authority's meetings are covered under the open meeting law; and amending sections 90-7-102, 90-7-104, 90-7-201, 90-7-202, 90-7-211, 90-7-213, 90-7-302, 90-7-305, and 90-7-317, MCA."

Be it enacted by the Legislature of the State of Montana:

Section 1.  Section 90-7-102, MCA, is amended to read:

"90-7-102.   Definitions. As used in this chapter, unless the context requires otherwise, the following definitions apply:

(1)  "Authority" means the Montana health facility authority created in 2-15-1815.

(2)  "Capital reserve account" means the account established in 90-7-317.

(3)  "Costs" means costs allowed under 90-7-103.

(4)  "Health facility" means any facility provided for in 90-7-104.

(5)  (a) "Health institution" means any public or private, nonprofit hospital, corporation, or other organization authorized to provide or operate a health facility in this state.

(b) The term also includes the following, provided that the entity is a nonprofit entity or is controlled by one or more nonprofit entities:

(i) a network of health care providers, regardless of how it is organized;

(ii) an integrated health care delivery system;

(iii) a joint venture or partnership between or among health care providers;

(iv) a health care purchasing alliance COMPOSED OF HEALTH CARE PROVIDERS;

(v) any health insurers and third-party administrators that are participants in a system, network, joint venture, or partnership that provides health services to THROUGH one or more health institutions FACILITIES.

(6)  "Participating health institution" means a health institution that undertakes the financing, refunding, or refinancing of obligations on the construction or acquisition of a health facility pursuant to the provisions of this chapter.

(7)  "Revenues" means, with respect to facilities, the rents, fees, charges, interest, principal repayments, and other income received or to be received by the authority from any source on account of such the facilities."

Section 2.  Section 90-7-104, MCA, is amended to read:

"90-7-104.   Eligible health facility. (1) Eligible health facility The term "eligible health facility" means any structure or building used suitable for use as:

(a) a hospital, clinic, nursing home, or other health care facility as defined in 50-5-101;

(b) center a facility for persons with developmental disabilities;

(c) center a facility for the handicapped;

(d) a chemical dependency treatment center;

(e) a nursing school;

(f) a medical teaching facility;

(g) a laboratory;

(h) a dental care facility;

(i) a diagnostic, treatment, or surgical center; or

(j) other a structure or facility related to any of the foregoing uses enumerated in subsections (1)(a) through (1)(i) or required or useful for the operation of a health facility. These related facilities include supporting service structures and all necessary, useful, and related equipment, furnishings, and appurtenances and include without limitation the acquisition, preparation, and development of all lands and real and personal property necessary or convenient as a site for any of the foregoing uses enumerated in subsections (1)(a) through (1)(i).

(2)  An eligible health facility does not include: such

(a) items such as food, fuel, supplies, or other items that are customarily considered as current operating expenses; and eligible health facility does not include

(b) a structure used or to be used primarily for sectarian instruction or study or as a place for devotional activities or religious worship."

Section 3.  Section 90-7-201, MCA, is amended to read:

"90-7-201.   Authority -- quorum -- mode of action -- expenses. (1) Four members of the authority constitute a quorum for the purpose of conducting business. Action may be taken by the authority upon the affirmative vote of at least four of its members. No A vacancy in the membership of the authority impairs does not impair the right of a quorum to exercise all the rights and perform all the duties of the authority.

(2)  Each meeting of the authority for any purpose must be open to the public. Notice of meetings must be as provided in the bylaws of the authority as provided for in Title 2, chapter 3, part 2. Resolutions need not be published or posted.

(3)  Each member is entitled to be paid $50 for each day he that the member is actually and necessarily engaged in the performance of board duties plus cost of travel, lodging, and meals as provided in 2-18-501 through 2-18-503."

Section 4.  Section 90-7-202, MCA, is amended to read:

"90-7-202.   Powers of authority. The authority may:

(1)  sue and be sued;

(2)  have a seal;

(3)  adopt all procedural and substantive rules necessary for the administration of this chapter;

(4)  issue bonds or incur other debt as described in this chapter, including the issuance of notes or refunding bonds;

(5)  invest any funds obtained from the issuance of bonds and notes which that are not required for immediate use, subject to any agreements with its bondholders and noteholders, as provided in Title 17, chapter 6, except that all investment income from funds invested by the authority, less the cost for investment, must be deposited in an enterprise fund to the credit of the authority to be used to carry out the purposes of this chapter;

(6)  contract in its own name for the investment of funds, borrowing of funds, or any other purposes it considers appropriate to carry out the purposes of this chapter;

(7)  participate with any financial institution in the purchase or guarantee of any loan or obligation;

(8)  issue bond anticipation notes or any other anticipatory financial obligations to secure funding of eligible facilities;

(9)  enter into agreements or make advance commitments to insure repayments required by loan agreements made by a lender. Such These agreements are subject to terms and conditions established by the authority.

(10) establish programs to make, sell, purchase, or insure loans to finance the costs of eligible facilities from any funds;

(11) accept gifts, grants, or loans from a federal agency, an agency or instrumentality of the state, a municipality, or any other source;

(12) enter into contracts or other transactions with a federal agency, an agency or instrumentality of the state, a municipality, a private organization, or any other entity consistent with the exercise of any power under this chapter;

(13) with regard to property:

(a)  acquire real or personal property or any right, interest, or easement therein in real or personal property by gift, purchase, transfer, foreclosure, lease, or otherwise;

(b)  hold, sell, assign, lease, encumber, mortgage, or otherwise dispose thereof of property;

(c)  hold, sell, assign, or otherwise dispose of any mortgage or loan owned by it or in its control or custody;

(d)  release or relinquish any right, title, claim, interest, easement, or demand, however acquired, including any equity or right of redemption;

(e)  make any disposition by public or private sale, with or without public bidding;

(f)  commence any action to protect or enforce any right conferred upon it by any law, mortgage, contract, or other agreement;

(g)  bid for and purchase property at any foreclosure or other sale or acquire or take possession of it in lieu of foreclosure; and

(h)  operate, manage, lease, dispose of, and otherwise deal with such property in any manner necessary or desirable to protect its interests or the holders of its bonds or notes if such that action is consistent with any agreement with such the holders;

(14) service, contract, and pay for the servicing of loans;

(15) provide general technical services in the analysis, planning, design, processing, construction, rehabilitation, and management of eligible health facilities whenever considered appropriate;

(16) consent, whenever it considers necessary or desirable in fulfilling its purposes, to the modification of the rate of interest, time, or payment of any installment of principal, interest, or security or any other term of any contract, lease agreement, loan agreement, mortgage, mortgage loan, mortgage loan commitment, construction loan, advance contract, or agreement of any kind, subject to any agreement with bondholders and noteholders;

(17) collect reasonable interest, fees, and charges from participating institutions in connection with making and servicing its lease agreements, loan agreements, mortgage loans, notes, bonds, commitments, and other evidences of indebtedness. The interest, fees, and charges shall must be deposited to an enterprise fund to the credit of the authority. Interest, fees, and charges are limited to the amounts required to pay the costs of the authority, including operating and administrative expenses, and reasonable allowances for losses that may be incurred, and bond financing costs, and to provide funds to make loans to finance the costs of eligible facilities.

(18) perform any other acts necessary and convenient to carry out the purposes of this chapter."

Section 5.  Section 90-7-211, MCA, is amended to read:

"90-7-211.   Necessary expenses -- fees. (1) All expenses of the authority incurred in carrying out the provisions of this chapter are payable solely from funds provided under the authority of this chapter, and no liability. Liability may not be incurred by the authority beyond the extent to which money has been provided under this chapter, except for the purposes of meeting the necessary expenses of initial organization and operation and until such the date as that the authority derives money from funds provided under this chapter. The authority may borrow money for necessary expenses of organization and operation. Such The borrowed money must be repaid within a reasonable time after the authority receives funds provided for under this chapter.

(2)  When an application is made to the authority by any participating health institution for financial assistance to provide for its facilities, the application may be accompanied by an initial planning service fee in an amount determined by the authority. Such The initial planning service fee may be included in the cost of the facilities to be financed and is not refundable by the authority, whether or not any application is approved. In addition to the initial fee, an annual planning service fee may be paid to the authority by each participating health institution in an amount determined by the authority. The annual planning service fee may be paid on such the dates or in installments as may be that are satisfactory to the authority. The fees must be used for:

(a)  necessary expenses to determine the need for facilities in the area concerned, and to that end the authority may utilize recognized voluntary and official health planning organizations and agencies at local, regional, and state levels;

(b)  necessary administrative, operating, and financing expenses; and

(c)  reserves for anticipated future expenses or loan losses; and

(d) loans to finance the costs of eligible facilities.

(3)  The authority may, for a negotiated fee, retain the services of any other public or private person, firm, partnership, association, or corporation for the furnishing of services and data for use by the authority in determining the need for and location of any eligible health facility for which application is being made or for such other services or surveys as that the authority considers necessary to carry out the purposes of this chapter."

Section 6.  Section 90-7-213, MCA, is amended to read:

"90-7-213.   Loan limitation. No A loan made by the authority may not exceed the total cost or appraised value of the eligible health facility being financed as such the cost or appraised value is determined by the participating institution and approved by the authority."

Section 7.  Section 90-7-302, MCA, is amended to read:

"90-7-302.   Bonds and notes of the authority. (1) The authority may in each biennium borrow money and issue bonds and notes in an aggregate principal amount not to exceed $150 $250 million, exclusive of bonds or notes issued to refund its outstanding bonds or notes.

(2)  Bonds must be authorized,. The authority may specify that the bonds must be dated, and must mature as the authority may specify, except that a bond may not mature more than 40 years from the date of its issue. Bonds must:

(a) bear interest at the a rate or rates,;

(b) be in the denominations,;

(c) be in the proper registered or bearer form,;

(d) be executed in the a manner,;

(e) be payable in the a medium of payment, and at the a place or places, and; and

(f) be subject to the terms of redemption that the authority may provide.

(3)  All bonds, regardless of form or character, are negotiable instruments for all purposes of the Uniform Commercial Code, subject to requirements as to registration.

(4)  All bonds may be sold at public or private sale in the manner, for the price or prices, and at the time or times which that the authority may determine.

(5)  Before the issuance of any bonds, the authority shall make provisions, by lease or other agreement, regarding the facility or facilities being financed by the issue of the bonds, for rentals or other considerations sufficient, in the judgment of the authority, to:

(a)  pay the principal of and interest on the bonds as they become due;

(b)  create and maintain the reserves for payment of the principal and interest;

(c)  meet all obligations in connection with the lease or other agreement; and

(d)  meet all costs necessary to service the bonds unless the lease or agreement provides that the obligations are to be met or costs are to be paid by a party other than the authority.

(6)  The authority, before issuing any bonds, shall certify that an applicant has submitted a statement that indicates that any contract let for a project costing more than $25,000 and financed from the proceeds of bonds issued under this part on or after July 1, 1993, will contain a provision requiring the contractor to pay the standard prevailing wage rate in effect and applicable to the district in which the work is being performed unless the contractor performing the work has entered into a collective bargaining agreement covering the work to be performed.

(7)  The authority may combine, for the purposes of a single offering, bonds financing more than one facility under this chapter."

Section 8.  Section 90-7-305, MCA, is amended to read:

"90-7-305.   Trust agreement to secure bonds. In the discretion of the authority, any bonds issued under this chapter may be secured by a trust agreement between the authority and a corporate trustee, which may be any trust company or bank having the powers of a trust company in Montana or outside of Montana, if it is determined by the authority to be in the best interest of financing the bonds. The trust agreement or the resolution providing for the issuance of such the bonds may pledge or assign the revenues to be received or the proceeds of any contract or contracts pledged and may convey or mortgage the project or any portion thereof of the project. The trust agreement or resolution providing for the issuance of such the bonds may contain such provisions for protecting and enforcing the rights and remedies of the bondholders as may be reasonable and proper and not in violation of law, including particularly such any provisions as that have been specifically authorized to be included in any a resolution of the authority authorizing bonds. Any A bank or trust company incorporated under the laws of this state, which that may act as depository of the proceeds of bonds or of revenues or other money, may furnish such indemnifying bonds or pledge such securities as that may be required by the authority. Any such A trust agreement may set forth the rights and remedies of the bondholders and of the trustee or trustees and may restrict the individual right of action by bondholders. In addition, any such a trust agreement or resolution may contain such other provisions as that the authority may consider reasonable and proper for the security of the bondholders. All expenses incurred in carrying out such the trust agreement or resolution may be treated as a part of the cost of the operation of an eligible health facility."

Section 8.  Section 90-7-317, MCA, is amended to read:

"90-7-317.   Capital reserve account. (1) There is a capital reserve account in the enterprise fund provided for in 90-7-202(17).

(2)  The authority shall deposit into the capital reserve account:

(a)  funds from state appropriations received for deposit into the account, as provided in 90-7-319, for bonds issued to finance capital projects for community health facilities that contract with the state to provide health care services or bonds issued to finance the facilities described in 90-7-220 and 90-7-221; and

(b)  proceeds from the sale of bonds or notes to the extent provided in the resolutions or indentures of the authority authorizing their issuance;.

(3) The authority may also deposit into the capital reserve account:

(c)(a)  revenue from fees and charges imposed by the authority;

(d)(b)  income from the investment of funds belonging to the authority; and

(e)(c)  any other funds that may be available to the authority for the purpose of the account from any other source, including loans authorized under 90-7-320."